Modicare-like option in ESI faces heat from RSS affiliate

NEW DELHI: Even as the Narendra Modi government is chalking out modalities of what is touted as world’s largest healthcare scheme proposed in the Union Budget earlier this month, a trade union affiliated to the Rashtriya Swayamsevak Sangh (RSS) has raised questions over the benefits of the model. Trade union members of the Employees State Insurance Corporation (ESIC), led by Bharatiya Mazdoor Sangh (BMS), are opposing the government’s plan to introduce health insurance schemes offered by other insurers as an option for employees. The unions are weighing options to stall a proposal, which will be up for consideration at the ESIC board meet later this week, to allocate Rs 1,000 crore next fiscal. The ESI scheme, which took off under a 1948 law, is among the oldest social security schemes and covers workers of various industrial establishmen...

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The ESI scheme, which took off under a 1948 law, is among the oldest social security schemes and covers workers of various industrial establishments.

NEW DELHI: Even as the Narendra Modi government is chalking out modalities of what is touted as world’s largest healthcare scheme proposed in the Union Budget earlier this month, a trade union affiliated to the Rashtriya Swayamsevak Sangh (RSS) has raised questions over the benefits of the model.

Trade union members of the Employees State Insurance Corporation (ESIC), led by Bharatiya Mazdoor Sangh (BMS), are opposing the government’s plan to introduce health insurance schemes offered by other insurers as an option for employees. The unions are weighing options to stall a proposal, which will be up for consideration at the ESIC board meet later this week, to allocate Rs 1,000 crore next fiscal.

The ESI scheme, which took off under a 1948 law, is among the oldest social security schemes and covers workers of various industrial establishments. To date, the scheme covers around 0.9 million employers and 29 million workers.

An ESIC board member representing BMS has written a letter to Union labour minister Santosh Gangwar opposing the move, calling it a circumvent attempt to implement an earlier move shot down by labour unions. The letter alleged that the plan would only enrich intermediaries such as insurance companies and private hospitals and would adversely affect the financial viability of the ESI scheme, which covers over 120 million beneficiaries.

“Financial sustainability of ESI Scheme would be adversely affected, as the basic principle of insurance -- pooling of risks by pooling of premium -- would be violated. The revenue is not pooled but divided between ESIC and insurance companies. But the overall risk is still borne by ESI (cost of medical care over and above the sum insured will also be borne by ESIC) despite the foregoing of a substantial amount of premium to the private insurance companies,” V Radhakrishnan, the BMS representative on the ESIC board, told Economic Times.

“The amount of cover is still not decided,” he added. The ESI cover does not have any cap.

Other unions are also in favour of strengthening ESI facilities and are likely to oppose this new insurance option. Prasanta Nandi Chowdhury, National Secretary, CITU, said there was a clear provision available within the framework of the ESI Act to move to other modes. “But, for that it has to be proved that alternative facilities are better than what was provided under the ESI scheme. ESI law doesn’t have the scope of an IRDAI (Insurance Regulatory and Development Authority of India) product. Earlier they (the government) wanted to amend the law, which we had protested. Now, they have taken the board route,” Chowdhury said adding, “It (the plan to provide insurance option) is not for the (benefit of) workers, it is for the penetration of insurance industry. We may be outvoted, but we shall protest loudly.”

Unions have a representation of 10 in a board of over 50 members in ESIC which includes members of Parliament, government officials and representatives from the industry.

A couple of industry representatives the Economic Times spoke to were in favour of choice, which is broadly in line with the government's position. Michael Dias, Secretary, The Employers Association Delhi and a ESIC board member, said, "Till now the insured person did not have any option. We welcome the option to choose an insurance plan. I am sure the employees will make the right choice. ESI also improves its service in an effort to keep its flock together when faced with competition."

Panchkula-based Rama Kant Bharadwaj, National Vice-President, Laghu Udyog Bharati, and a ESIC board member, asked, "Where is the question of diluting the scheme? It is up to the employees to make a choice. There are several complaints about the service. We don't see any problem in giving the choice. If they (the government) had said it was compulsory, then there would have been a problem."

At the board meeting scheduled this Friday, it is proposed to give options to beneficiaries to choose between ESI scheme and a health insurance product. According to the proposal, the insured persons who contribute for minimum 78 days in two consecutive contribution periods (six months) can opt for a floater health insurance policy instead of in-patient care under the ESI scheme. The beneficiary will be issued a health insurance policy by an IRDA-recognised company for a fixed sum, depending on the contribution paid during that period.

Under the proposal, ESIC will buy policies in bulk from health insurance companies and provide them to insured persons who opt for it. Rs 1000 crore has been earmarked in the ESIC budget proposal for the financial year 2018-19 for funding the health insurance scheme.

A foreign agency has also been roped in as a consultant for providing technical advice to implement the health insurance scheme. The new plan is stated to be in accordance with Finance Minister Arun Jaitley’s Budget proposals for 2015-16. Jaitley had said in his Budget speech, “With respect to ESI, the employee should have the option of choosing either ESI or a health insurance product recognised by the IRDAI. We intend to bring amending legislation in this regard, after stakeholder consultation.” The government, however, dropped the plan to amend law after protests.

The ESIC, with its headquarters in New Delhi, operates through a network of 63 regional and sub-regional offices in various states. The administration of medical benefit is looked after by the respective state government except in the National Capital Region. The corporation has taken over the administration of 36 ESI hospitals in various states for developing these as ESIC Model Hospitals.

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